Two auto industry examples illustrate how acquisitions succeed or fail. In the first, Daimler acquired Chrysler and smaller shares of Mitsubishi and Hyundai. In the second, Renault bought a one-third stake in Nissan. Daimler was stronger than the companies it acquired and could never sync with them. The marriage foundered. Renault and Nissan were similar in size, the acquisition succeeded and Nissan's been revived under Renault's partial ownership.
Ability to mesh well with the acquired/acquiring company is but one factor to strongly consider before proceeding with an acquisition. The following is a short list of strategies to understand when acquiring or being acquired by another company.
- Synergy must result. If an acquisition doesn't make the two companies better together than either would be on its own, why move forward? The deal's equation must be not 1 + 1 = 2, but 1 + 1 = 3 or more. Synergies may flow from the companies gaining greater revenues, realizing reduced costs or achieving enhanced sustainability together.
- Collaboration and shared objectives. The acquisition has a far better chance of succeeding if the two companies possess similar goals and can come together to collaborate harmoniously on key aspects of the businesses.
- Transition team essential. There must be a top-notch team in place to manage the transition from two separate companies to one entity pulling together. It's a crucial stage in creating a good cultural fit. The best players must be calling the shots.
Figures show just 25 percent of mergers and acquisitions succeed. Follow the principles above, and yours may be among that fortunate percentage.
What do you feel are the most important keys to an acquisition?